“When the stars align, funds like this can take off,” said Ugo Egbunike, an ETF specialist at IndexUniverse, in the article.

DXJ invests in Japanese stocks but hedges its exposure to the movement of the yen. Therefore, it has outperformed unhedged Japan ETFs as the yen plummets following the election of Shinzo Abe as prime minister. Abe is committed to pressuring the Bank of Japan to take further easing measures to weaken the yen and assist Japan’s struggling economy.

Because the money flowing into WisdomTree’s Japan fund is the result of a popular trade, it could reverse if sentiment changes, said Patricia Oey, an analyst at Morningstar, in the Bloomberg story. “If the yen strengthened, money could come out pretty quickly,” she said.

“The Japanese market moved in one direction for a long time,” WisdomTree research director Jeremy Schwartz countered in the report. “This new trend could last a considerable period.”

WisdomTree Japan Hedged Equity Fund

WisdomTree Investments

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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